1. When setting up reseller accounts in WHM, on the bottom of the reseller privelages area there are nameserver fields. Do these *technically* function properly virtually 100% of the time when each reseller account has their own private dns, without affecting the server?

2. What should I not do / and what should I do?
(what to activate, not activate in privelages such as DNS editing, etc.)

1)
If you give them nameservers with their own IP's yes.
If you use shared nameserver IP's, some registrars don't allow it, so it's not always possible.

2)
Pretty much depends on your level of trust. As a general rule, only give whatever options and limits are needed. Always set limits on the number of accounts, space, and bandwidth, they can use. If they need more, they can ask when they need it.

3)
As long as you are the one in control, there should be no problems with reseller accounts. Just watch that a spammer doesn't sign up for a reseller account, then get your server IP blacklisted.